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2019 (11) TMI 273

..... ), she placed reliance on the following cases. But she could not controvert the contention of the Ld. Counsel for the assessee that the issue of activity of publishing of news paper is squarely covered by the decision of the ITAT, Delhi ‘A’ Bench vide order dated 17.09.2019 passed in assessee’s own case for the assessment [2019 (10) TMI 662 - ITAT DELHI] wherein the said activity has been declared as charitable. As regards issues of double addition are concerned, she has no objection if the said issues be set aside to the AO for verification whether the said amount tantamount to double addition or not. Addition on account of income deemed under the provisions of Section 11 (3) - HELD THAT:- After perusing the computation of income for the Assessment Year 2010-11 placed in Paper Book, we find considerable cogency in the contention of the Ld. Counsel for the Assessee that the Assessee suo-moto has already increased its assessable income for the relevant previous year ended on March 31, 2010 and further the said addition made by the AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to doubl .....

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..... d in Revenue s Appeal Nos. 3648 & 3649/Del/2017 wherein identical issues are involved which are relating to assessment yea₹ 2010-11 & 2012-13. 2. The Grounds raised in Assessee s ITA No. 3081/Del/2017 (AY 2010-11) read as under:- 1. That in view of the facts and circumstances of the case the order passed by the CIT(A) and the assessment order is illegal, bad in law and without jurisdiction. 2. That the order of the CIT (A) is being assailed of being perverse, as the same is passed without considering the submissions of the Appellant, taking a holistic view of the matter and the ratio's of various case laws which have been relied by the Appellant. 3. That the CIT(A) has erred in law and in facts confirming the order of the AO wherein he has denied the exemption U/s 11 of the Act to the Appellant. 4. That the CIT (A) has erred in law in holding that the activities conducted by the Appellant are not in accordance with the objects of the Appellant society. 5. That the CIT (A) has erred in law and in facts in confirming the order of the AO wherein the AO has not allowed the accumulation of income of ₹ 2,25,84,589/- U/s 11(3) of the Act to the Appellant. 6. The Ap .....

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..... diture A/c as no documentary evidence for actual payment of the expenses was furnished during the assessment proceedings. 2.3 The grounds raised in Revenue s Cross ITA No. 3649/Del/2017 (AY 2012- 13) read as under:- 1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in allowing expenditure as provisions for doubtful debts and provision for arrear of salary. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in allowing utilization of income u/s. 11(2) expenditure as this account has already been allowed on deemed basis earlier years. 3. On the facts and in the circumstances of the case and in law, the decision of the Ld. CIT(A) is not acceptable as Interest Income and Other Income should be credited in Income and Expenditure A/c as the Assessing Officer has computed income of the assessee on the basis of Income & Expenditure account submitted during the assessment proceedings. 4. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting addition as Gratuity expenses claimed in Income and Expenditure A/c as no documentary evidence for actual payment of the expenses was furn .....

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..... stating, "nothing has been brought on record to show how the activity of running the newspaper business is incidental to the main objective of the Trust." 2.4. That the Hon'ble CIT(A) has erred 00 facts and in law by invoking Section 13(8) of the Act and thereby, sustaining an addition amounting to ₹ 7,62,81,269 on account of surplus generated from publication of newspapers. 3. That on the facts and circumstances of the case the Hon'ble CIT(A) has erred in not adjudicating with regard to surplus amounting to ₹ 2,73,83,417; interest and other income of ₹ 3,36,37,911 and agricultural expenses of ₹ 20,22,411. 4. That having regard to the facts and circumstances of the case and in law the Hon'ble CIT(A) has erred in affirming the impugned assessment order wherein it has been wrongly held that, "running of newspaper is not incidental to the objects of the appellant and that it is in the nature of business since the assessee itself has submitted audit reports in From 3CB and 3CD and resultantly, on the Hon'ble High Court of Delhi decision on Mehta Charitable Prajnalaya Trust." 5. That having regard to the facts of the case and i .....

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..... incidental to the main objectives of the trust. 2.2 That the Hon'ble CIT(A) has erred on facts and in law in denying exemption in terms of Section 11 of the Act basis irrelevant consideration that the activities carried on by the appellant did not aid and assist in accomplishing the main object, to enlist and train national missionaries for the service of motherland. 2.3 That on the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in stating, nothing has been brought on record to show how the activity of running the newspaper business is incidental to the main objective of the Trust. 2.4 That on the facts and circumstances of the case and in law, the Hon'ble ClT(A) in complete disregard of the fact that the printing press was instrumental in achieving the objectives of the Trust and keeping alive the motto of Pandit Gopal Banhu Das, has erroneously concluded that the printing press is a business activity not quantifying as a charitable activity. 3. The Hon'ble CIT(A) has erred on facts and in law invoking Section 13(8) of the Act and thereby, sustaining an addition amounting to ₹ 24,586,358 on account if surplus earned from publica .....

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..... facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of ₹ 1,27,33,613/- on the ground that the assessee had itself disallowed the same in computation of income, ignoring the fact that unless the same is claimed as expenditure the assessee would not have disallowed it. 4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2.7 The grounds raised in Revenue s Cross ITA No. 4049/Del/2018 (AY 2014- 15) read as under:- 1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting ₹ 3,47,18,749/- even though the assessee has shown this amount of ₹ 3,47,18,749/- towards interest income from term deposit of Orissa Branch which has been credited directly in the earmarked and reserve fund and this amount has not been shown in the Income and Expenditure Account. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 3,47,18,749/- by holding that the assessee has already disclosed this amount in computation of income ignoring the fact that the AO while computing taxable .....

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..... s not attached hereto as required under sub section (4A) of section 11 of section of the I.T. Act, 1961 in view of the Society having been notified u/s 10(23)(c)(iv) for the assessment years 1990-91 to 1992-93 vide notification dated 27.01.1995 and application for similar notification stated to have been made and approval awaited for subsequent years. 3.2 Assessee-society is engaged in printing and publication of newspaper and a show cause notice dated 25.02.2013 was issued fixing the case on 01.03.2013. In response to the show cause notice counsel of the assessee attended the proceedings on 15.03.2013. The assessee has taken plea that the earlier assessment years were made at NIL. Further the question of nature of activities of the society being commercial in nature was raised in AY 1973-74. The Ld. CIT(A) and Tribunal decided this issue in favour of the assessee. The Department filed reference applications in ITAT for filing appeals to the High Court. Later on reference applications were withdrawn. The assessee is also taken the plea that the CBDT has also treated its activities as charitable. After considering the submissions of the assessee as well as law applicable in the case .....

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..... ction 13(8) of the Act is applicable and surplus generated of ₹ 6,00,34,647/- from newspaper business is taxed at maximum marginal rate and levy of penalty u/s. 271(1)© of the Act also alongwith various other additions mentioned in para no. 13 to 19 of the assessment order dated 15.3.2013 passed u/s.143(3) of the Act. Aggrieved with the assessment order dated 15.3.2013, assessee filed the appeal before the Ld. CIT(A), who vide his impugned order dated 01.3.2017 has partly allowed the appeal of the assessee against which the Assessee as well as Revenue are in cross appeals before the Tribunal. 4. At the time of hearing, Ld. Counsel for the assessee filed his Synopsis/Written Submissions in all the appeals filed by the Assessee as well as by the Department and the same are reproduced hereunder:- Synopsis : 2010-11 : 3081/Del/2017 & 3648/ Del/2017 (Cross Appeals) Appellant Appeal: ITA No. 3081/ Del! 2017 Ground No.1 and 2: General in Nature Ground No.3 and 4: Addition of ₹ 6,00,34,647 /- on account of surplus generated from the activity of publishing of Newspaper. The said issue is covered in favour of the Appellant by the Hon'ble Tribunal Order dated Septembe .....

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..... und No.1 and 2: General in Nature Ground No.3 and 4: Addition of ₹ 9,66,08,554 /- on account of surplus generated from the activity of publishing of Newspaper and ₹ 2,63,41,112/- on account of surplus generated from activities of the Appellant centered at Delhi. The said issue is covered in favour of the Appellant by the Hon'ble Tribunal Order dated September 17,2019 (copy enclosed and marked as Annexure 1- 9) passed in the Appellant own's case, ITA No. 4984/ Del! 2015 for the Assessment Year ('AY') 2011-12. Ground No.5: Addition of ₹ 47,11,596/- on account of income deemed under the provisions of Section 11(3) of the Act. The Appellant suo-moto has already increased its assessable income by ₹ 47,11,596/- for the relevant previous year ended on March 31, 2012. (refer computation of income for the Assessment Year 2012- 13 placed at Annexure 11) Further, the said addition made by the Ld. AO tantamount to double addition. Ground No.6 and 7: General in nature. Departmental Appeal: ITA No. 3649/ Del/2017 Ground No.1: Disallowance of₹ 59,32,500/- on account of Provision for Bad and Doubtful Debts and ₹ 1,00,00,000/- on account of provis .....

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..... 1/- on account of Interest and other income credited in reserve fund for activities centered at Delhi and disallowance of arm expenses of ₹ 20,22,411/-. In regard to the addition of ₹ 2,73,83,417/- on account of surplus generated from activities centered at Delhi, the Appellant submits that the said issue is covered in favour of the Appellant by the Hon'ble Tribunal Order dated September 17, 2019 (copy enclosed and marked as Annexure 1 - 9) passed in the Appellant own's case, ITA No. 4984/ Del/ 2015 for the Assessment Year ('AY') 2011-12. Further, as regards the addition of ₹ 3,36,37,911/- on account of Interest and other income credited in reserve fund for activities centered at Delhi, the Appellant submits that it suo-moto has already increased its assessable income by ₹ 3,36,37,911/- for the relevant previous year ended on March 31,2013. (refer computation of income for the Assessment Year 2013-14 placed at Annexure 12) Also, the Appellant submits that it has duly considered the farm expenses of ₹ 20,22,411/- while suo-moto disallowing the agriculture income in its computation of income. (refer computation of income for the Assessmen .....

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..... rder dated September 17,2019 (copy enclosed and marked as Annexure 1 - 9) passed in the Appellant own's case, ITA No. 4984/ Del/ 2015 for the Assessment Year (lAY') 2011-12. Further, as regards the addition of ₹ 2,50,79,967/- on account of Interest and other income credited in reserve fund for activities centered at Delhi, the Appellant submits that it suo-moto has already increased its assessable income by ₹ 1,27,33,613/- for the relevant previous year ended on March 31,2014. (refer computation of income for the Assessment Year 2014-15 placed at Annexure 13) Further, the said addition made by the Ld. AO tantamount to double addition. Ground No.8: Disallowance of₹ 28,30,527/- on account off arm expenses. The Appellant submits that it has duly considered the farm expenses of ₹ 28,30,527/- while suo-moto disallowing the agriculture income in its computation of income. (refer computation of income for the Assessment Year 2014-15 placed at Annexure 13) Further, the said disallowance made by the Ld. AO tantamount to double disallowance. Ground No.9: General in Nature Departmental Appeal: ITA No. 4049/ Del/ 2018 Ground No.1 and 2: Addition on account of In .....

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..... are concerned, she has no objection if the said issues be set aside to the AO for verification whether the said amount tantamount to double addition or not, as requested by the Ld. Counsel for the assessee, as aforesaid. - Information Systems Audit & Control Association vs. Deputy Director of Income Tax (Exemptions)-1, Chennai - passed in ITA No. 1693 (Mds.) of 2015 (2016) 67 taxmann.com 140 (Chennai- Trib). - Murasoli Trust vs. Assistant Director of Income Tax (Exemptions IV), Chennai (2016) 65 taxmann.com 186 (Chennai-Trib.) - Indian Tools Technology Centre vs. CIT-I, Jalandhar (2014) 42 taxmann.com 359 (Amritsar -Trib.) - New Elim Charitable & Educational Trust. Vs. CIT-1, Cochin-1 (2013) 40 taxmann.com 373 (Cochin-Trib.) - Win Publication Trust vs. CIT, Kochi (2014) 41 taxmann.com 119 (Cochin Trib.) - Employers Federation of Southern India vs. ADIT(E)-III, Chennai (2017) 88 taxman.com 751 (Chennai-Trib.) - CIT vs. Sree Anjaneya Medical (2016) 74 taxamann.com 243 (SC). - ACIT vs. Grama Vidiyal Trust (2016) 71 taxamann.com 88 (Chennai -Trib.) - DCIT (Exemptions)-II, Chennai vs. Chennai Kammavar Trust (2017) 81 taxmann.com 365 (Chennai-Trib.) - ITO (E), Chennai vs. FRP Ins .....

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..... gly allowed the relief to the aforesaid case. After considering all the facts and circumstances of the case, we are of the considered view that the assessee is a charitable and non-profit institution and also found that assessee is not involved in any trade, commerce or business activity which attracts the mischief of the Proviso of section 2(15) of the Act and the assessee has been enjoying the exemption u/s. 11(1) and also u/s. 10(23C)(iv) in the past and accordingly following the principle of consistency the AO was rightly directed to allow the exemption to the assessee u/s. 11(1) of the Act with all the consequential benefits by the Ld. CIT(A). Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we uphold the same and reject the grounds raised by the Revenue and accordingly, dismiss the appeal filed by the Revenue. 6.2.1 Respectfully following the precedent, as aforesaid, the additions in dispute are hereby deleted and accordingly, the ground no. 3 & 4 are allowed. 6.3 As regards ground no.5 which is relating to Addition of ₹ 2,25,84,589/- on account of income deemed under the provisions of Section 11 (3) of the Act is concerned, after perus .....

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..... ount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. 7.2 As regards Ground No.3: Addition of ₹ 2,18,37,525/- on account of interest and other income credited in reserve fund for activities centered at Delhi. It is noted that Assessee suo-moto has already increased its assessable income by ₹ 2,18,37,525/- for the relevant previous year ended on March 31, 2010. Further, the said addition made by the AO tantamount to double addition, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. In the result, the Revenue s Appeal stands allowed for statistical purposes. Revenue s Cross Appeal : ITA No. 3649/Del/2017 (AY 2012-13) 7.3 Following the consistent view as taken in ITA No. 3648/Del/2017 (AY 2010-11), as aforesaid, the ground no. 1, 2 & 3 raised in ITA no. .....

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..... as under challenge being discriminatory in view of the Article 14 (Equality before law) of the Constitution of India but the Hon ble High Court has read down the strict and literal interpretation of the Proviso of setion 2(15) and has held that mere receipt of fee or charge cannot be said that the assessee is involved in any trade, commerce or business and has accordingly allowed the relief to the aforesaid case. After considering all the facts and circumstances of the case, we are of the considered view that the assessee is a charitable and non-profit institution and also found that assessee is not involved in any trade, commerce or business activity which attracts the mischief of the Proviso of section 2(15) of the Act and the assessee has been enjoying the exemption u/s. 11(1) and also u/s. 10(23C)(iv) in the past and accordingly following the principle of consistency the AO was rightly directed to allow the exemption to the assessee u/s. 11(1) of the Act with all the consequential benefits by the Ld. CIT(A). Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we uphold the same and reject the grounds raised by the Revenue and accordingly, dismiss the .....

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..... al purposes. Departmental Appeal: ITA No. 4207/ Del/2018 (AY 2013-14) 9. As regards Ground No.1 relating to disallowance of ₹ 2,04,38,830/- on account of Provision of Bad and Doubtful Debts and ₹ 6,51,049/- on account of Provision for Arrears of Salary. The assessee suo-moto has already increased its assessable income by reducing its expenditure by an amount of ₹ 2,04,38,830/- and ₹ 6,51,049/- for the relevant previous year ended on March 31, 2013. Further, the said disallowance made by the. AO tantamount to double disallowance, which in our opinion, needs to be verified at the level of the AO whether the same tantamount to double addition or not and then decide the same afresh, after giving adequate opportunity of being heard to the assessee. We hold and direct accordingly. 9.1 As regards ground 2 relating to Addition of ₹ 1,27,33,613/- on account of Accumulation of income under section 11(2) of the Act. The Assessee suomoto has already increased its assessable income by ₹ 1,27,33,613/- for the relevant previous year ended on March 31, 2013. Further, the said addition made by the Ld. AO tantamount to double addition, which in our opinion, needs .....

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